Low correlation doesn’t automatically mean low risk.
I used to think adding stocks to a crypto-heavy portfolio was almost automatically a diversification move.
So I ran a simple 30-day check.
I compared daily returns for BTC with several Binance bStocks, including NVDAB, TSLAB and MUB.
The result was more interesting than I expected.
In my sample, MUB showed the weakest relationship with BTC — around 0.35 correlation.
But MUB also had by far the largest daily moves, with daily volatility around 7%, versus roughly 1.5% for BTC.
That changed how I think about diversification through bStocks.
Correlation tells me how differently two assets move.
It doesn't tell me how much each one can move.
So I wouldn't call an asset “diversifying” just because it doesn't move exactly like BTC.
I'd ask two separate questions:
How differently does it move?
And how much does it move?
For me, that's a much better way to think about portfolio diversification.
#bstockscis @BinanceCIS
I used to think adding stocks to a crypto-heavy portfolio was almost automatically a diversification move.
So I ran a simple 30-day check.
I compared daily returns for BTC with several Binance bStocks, including NVDAB, TSLAB and MUB.
The result was more interesting than I expected.
In my sample, MUB showed the weakest relationship with BTC — around 0.35 correlation.
But MUB also had by far the largest daily moves, with daily volatility around 7%, versus roughly 1.5% for BTC.
That changed how I think about diversification through bStocks.
Correlation tells me how differently two assets move.
It doesn't tell me how much each one can move.
So I wouldn't call an asset “diversifying” just because it doesn't move exactly like BTC.
I'd ask two separate questions:
How differently does it move?
And how much does it move?
For me, that's a much better way to think about portfolio diversification.
#bstockscis @BinanceCIS
